Broadcom offers to buy Qualcomm in $130bn deal

Arturo Norris

Qualcomm's chips and patents affect nearly every smartphone model in the world, and Broadcom is offering $70 a share, which is a 28pc premium on Qualcomm's closing stock price last Thursday (2 November) according to a report in The New York Times.

The offer came after Broadcom chief executive Hock Tan appeared with President Donald Trump last week and announced the company is likely to relocate its headquarters from Singapore to the US.

Broadcom and Qualcomm are no strangers to acquisitions, with the pair in talks to complete multibillion-dollar deals. The deal would dwarf Dell Inc.'s $67 billion acquisition of EMC in 2015 - then the biggest in the technology industry.

Qualcomm is preparing to fend off the unsolicited offer, arguing it undervalues the company, people familiar with the plans have said. Including debt, Broadcom's bid values the transaction at $130 billion.

Specifically Broadcom is offering to pay $70.00 per Qualcomm share, with $60.00 being in cash and $10.00 per share in Broadcom shares. There has been regulatory scrutiny for that deal in Europe, as well as reported objections from NXP stakeholders.

"We would not make this offer if we were not confident that our common global customers would embrace the proposed combination", Tan said in a company release Monday.

"The combined company will be positioned to deliver more advanced semiconductor solutions for our global customers and drive enhanced stockholder value", he added.

Broadcom has been trying to get regulatory approval for its purchase of Brocade Communications Systems Inc since 2016.

Qualcomm has a (long) pending acquisition, of chipmaker NXP Semiconductors NV, in the works - and Broadcom notes that its offer is not dependent on whether or not Qualcomm manages to close with NXP on the now disclosed terms (it's offering ~$39BN for the Netherlands-based chipmaker which has a focus on car-related applications and also security-based identification).

Japanese telecoms firm SoftBank has already agreed a deal to buy British semiconductor firm Arm, while Intel bought Altera, and Qualcomm has agreed a deal for NXP.

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